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EXHIBIT 10.4
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ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXX XXXXXX MULTIMEDIA HOLDINGS, INC.
XXXXX XXXXXX MULTIMEDIA COMPANY, INC.
AND
HIGHTEXT INTERACTIVE, INC.
February 13, 1998
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ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of February 13, 1998, by and among XXXXX XXXXXX
MULTIMEDIA HOLDINGS, INC., a Delaware corporation (hereafter referred to as
"Purchaser"), XXXXX XXXXXX MULTIMEDIA COMPANY, INC., a New York corporation
(hereafter referred to as "BPMC") and HIGHTEXT INTERACTIVE, INC., a California
corporation (hereinafter referred to as "Seller"). Purchaser and BPMC are
sometimes referred to herein collectively as the "Purchaser Parties."
W I T N E S S E T H :
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, certain
assets of Seller on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the agreements herein set forth and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article I. Certain
additional defined terms are set forth elsewhere in this Agreement.
1.1 ACQUIRED ASSETS. "Acquired Assets" shall mean all of Seller's right,
title and interest in and to the following assets of Seller which the Purchaser
is acquiring, effective as of the date hereof, pursuant to the terms of this
Agreement:
(i) all of the computer software described on Schedule A hereto
and any and all source codes, documentation, manuals, modules, gold masters,
artwork, color separations for packaging or syquest disks of packaging
documentation, inventory (which inventory is substantially as listed on Schedule
D (the "Inventory")) and any and all other tangible embodiments thereof (in
whatever form or medium) relating thereto (collectively, the "Software");
(ii) any and all United States and foreign copyrights, copyright
registration applications, trademarks, trademark registrations, trademark
applications, trade names, trade name registrations, trade name registration
applications and any and all other related items of intellectual property or
other intangible assets, including the "URL," if any, for "Crash Course,"
related to the intangible property listed on Schedule B hereto (the
"Intellectual Property");
(iii) all of Seller's right, title and interest in Seller's web
site, if any, relating to Seller's "Crash Course" business, including any
internet domain names (the "Web Site"); and
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(iv) any and all warranties, claims and causes of action against
third parties relating to any of the assets transferred pursuant to this
Agreement;
1.2 ASSUMED LIABILITIES. "Assumed Liabilities" means (i) only those
liabilities set forth on Schedule C, but only to the extent of $30,000.00, and
(ii) the executory portion of all of Seller's license, royalty, development and
other agreements set forth on Schedule A, but only with respect to the period
after the date hereof. Purchaser hereby assumes and agrees to discharge when
due, the Assumed Liabilities. The assumption of the Assumed Liabilities
hereunder shall not expand the rights or remedies of any third party against the
Purchaser or Seller as compared to the rights and remedies which such third
party would have had against the Seller had the Purchaser not assumed the
Assumed Liabilities.
1.3 COMMON STOCK. "Common Stock" means the shares of common stock par
value $.001 per share of BPMC.
1.4 FINANCIAL STATEMENTS. "Financial Statements" shall mean the balance
sheet of the Seller as of December 31, 1996, and the related statements of
operations, deficit and change in financial position for the year ended December
31, 1996, including any related notes.
1.5 PERSON. "Person" means and includes an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or other department or agency thereof.
1.6 SECURITIES ACT. "Securities Act" means the Securities Act of 1933, as
amended.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 SALE AND PURCHASE OF ASSETS. (a) Subject to the terms and conditions
set forth in this Agreement, Seller hereby sells, transfers and assigns to the
Purchaser, and the Purchaser hereby purchases from Seller all of Seller's right,
title and interest in and to the Acquired Assets.
(b) Except for the Assumed Liabilities, Purchaser does not assume any of
Seller's accounts payable, obligations (contingent or otherwise), liabilities or
other debts of any kind, all of which will remain Seller's obligations. Without
limiting the generality of the foregoing, Seller hereby covenants and agrees to
pay and discharge when due any and all of its liabilities, other than the
Assumed Liabilities, including, but not limited to, any tax liabilities, any
liability to JVC, Xxxxx X. Xxxxxxx, GloLar Multimedia Productions, Xxxxx Xxxxx,
Xxxx Xxxxx, Xxx Xxxxxxx or Xxxxx Xxxxx, any pending or threatened litigation,
any unknown or undisclosed claims, liabilities or obligations; provided,
however, that nothing herein shall prohibit Seller from contesting in good faith
any alleged liability to a third party.
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2.2 CONSIDERATION. The aggregate consideration to be delivered by the
Purchaser for the Acquired Assets is One Hundred Fifty Thousand (150,000) shares
of Common Stock of BPMC (the "Payment Shares"). The Purchaser Parties hereby
guarantee an aggregate selling price of the Common Stock at $1.33 per share,
before commissions or other transaction fees, for each such share actually sold
on a bonafide trade on The NASDAQ Market System or such other exchange or over
the counter market that BPMC's Common Stock is then listed or traded during the
period beginning one (1) year and ending eighteen (18) months from the date
hereof (the "Determination Period"). To the extent that Seller sells any or all
of the Payment Shares during the Determination Period, the Purchaser Parties
will pay to Seller the amount of the Shortfall in cash or stock, at their sole
discretion. For purposes of this Agreement, a "Shortfall" shall mean the
difference between (A) the aggregate sales price, before commissions or other
transaction fees, obtained by Seller in respect of all of the Payment Shares
sold during the Determination Period less (B) the number of such Payment Shares
sold by Seller during the Determination Period multiplied by $1.33. In the event
of a Shortfall, the Purchaser Parties shall deliver either cash or Shortfall
Shares to the Seller, within thirty (30) business days of its receipt of written
notice, which notice shall be given no earlier than at the end of the
Determination Period, by the Seller of such Shortfall accompanied with
documentation that is reasonably acceptable to the Purchaser that supports such
Shortfall calculation. In the event that the Purchaser Parties elect to make up
such Shortfall with Shortfall Shares, the value of a Shortfall Share shall be
the average of the closing sale price of the Common Stock for the twenty (20)
business days immediately following the end of the Determination Period. The
definition of "Shortfall" shall be appropriately adjusted in the event of any
stock split, stock dividend, reverse stock split or other recapitalization of
BPMC. For example, if BPMC were to engage in a ten for one reverse stock split,
then $13.30 would be substituted for $1.33 in the definition of Shortfall.
ARTICLE III
REPRESENTATIONS OF THE PURCHASER
Each of BPMC and the Purchaser represents, warrants and covenants to Seller
as follows:
3.1 ORGANIZATION. (a) The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Purchaser is duly qualified to transact business as a foreign corporation in
all jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification and the failure to so
qualify would have a material adverse effect on the business, financial
condition, results of operations or properties of the Purchaser. The Purchaser
has all requisite right, corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The Purchaser has the requisite corporate power and authority to own or lease
and operate its properties and conduct its business as presently conducted.
(b) BPMC is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York. BPMC is duly qualified to
transact business as a foreign corporation in all jurisdictions where the
ownership or leasing of its
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properties or the conduct of its business requires such qualification and the
failure to so qualify would have a material adverse effect on the business,
financial condition, results of operations or properties of BPMC. BPMC has all
requisite corporate right, power and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby. BPMC has
the requisite corporate power and authority to own or lease and operate its
properties and conduct its business as presently conducted.
3.2 AUTHORIZATION; ENFORCEABILITY. Each of BPMC and the Purchaser has the
capacity to execute, deliver and perform this Agreement. All documents executed
and delivered by either BPMC or the Purchaser, as the case may be, pursuant to
and in connection with the transactions contemplated by this Agreement have
been duly authorized by all requisite corporate action on the part of such
party, and this Agreement and all documents to be executed and delivered by
each of BPMC or the Purchaser, as the case may be, pursuant to this Agreement
have been and will be duly executed and delivered by each of BPMC or the
Purchaser, as the case may be, and constitute the legal, valid and binding
obligations of such party, enforceable in accordance with their respective
terms, except to the extent that their enforcement is limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
3.3 NO VIOLATION OR CONFLICT. The execution, delivery and performance of
this Agreement by each of BPMC and the Purchaser and the consummation by each
of BPMC and the Purchaser of the transactions contemplated hereby do not
violate or conflict with any law or regulation (whether federal, state of
local), writ, order or decree of any court or governmental or regulatory
authority applicable to such party, or any provision of either BPMC's or the
Purchaser's Certificate of Incorporation or Bylaws.
3.4 BROKERS. Except as set forth on Schedule 3.4 neither BPMC nor the
Purchaser has employed any financial advisor, broker or finder, and neither has
incurred or will incur any broker's, finder's, investment banking or similar
fees, commissions or expenses in connection with the transactions contemplated
by this Agreement.
3.5 CAPITALIZATION. The authorized capital stock of BPMC consists of: (a)
30,000,000 shares of common stock, $.001 par value, of which 7,399,438 shares
are issued and outstanding as of the date hereof; and (b) 5,000,000 shares of
preferred stock, of which there are no shares issued and outstanding. All
shares of BPMC's issued and outstanding capital stock have been duly
authorized, are validly issued and outstanding, and are fully paid and
nonassessable. No securities issued by BPMC from the date of its incorporation
to the date hereof were issued in violation of any statutory or common law
preemptive rights. There are no dividends which have accrued or been declared
but are unpaid on the capital stock of BPMC. The Payment Shares, when issued
pursuant hereto, shall be validly issued and outstanding and fully paid and
nonassessable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
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In order to induce BPMC and the Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby, the Seller
makes the following representations and warranties to BPMC and the Purchaser:
4.1 ORGANIZATION. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. The Seller is duly qualified to transact business as a foreign
corporation in all jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification and the
failure to so qualify would have a material adverse effect on the business,
financial condition, results of operations or properties of the Seller. The
Seller has all requisite corporate right, power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The Seller has the requisite corporate power and authority
to own or lease and operate its properties and conduct its business as most
recently conducted.
4.2 AUTHORIZATION; ENFORCEABILITY. The Seller has the capacity to
execute, deliver and perform this Agreement. All documents executed and
delivered by the Seller pursuant to and in connection with the transactions
contemplated by this Agreement have been duly authorized by all requisite
corporate action on the part of the Seller, and this Agreement and all
documents to be expected and delivered by the Seller pursuant to this Agreement
have been and will be duly executed and delivered by the Seller and constitute
the legal, valid and binding obligations of the Seller, enforceable in
accordance with their respective terms, except to the extent that their
enforcement is limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights generally and by
general principles of equity.
4.3 NO VIOLATION OR CONFLICT. The execution, delivery and
performance of this Agreement by the Seller and the consummation by the Seller
of the transactions contemplated hereby do not violate or conflict with any law
or regulation (whether federal, state or local), writ, order or decree of any
court or governmental or regulatory authority applicable to the Seller, or any
provision of the Seller's Certificate of Incorporation of Bylaws.
4.4 CONSENTS OF GOVERNMENTAL AUTHORITIES AND OTHERS. No consent,
approval or authorization of, or registration, qualification of filing with,
any federal, state or local governmental or regulatory authority is required to
be made by the Seller in connection with the execution, delivery or performance
of this Agreement by the Seller or the consummation by the Seller of the
transactions contemplated hereby.
4.5 CONDUCT OF BUSINESS. The Sellers no employees and has gone out
of business, except for a minimal amount of inventory sales to Educorp Direct,
Inc. or its successor in interest Educorp LLC. The amount and identity of the
Inventory being transferred to Purchaser hereunder is substantially as set forth
on Schedule D.
4.6 LITIGATION. There is no litigation pending or to the best of
the Seller's knowledge threatened before any court or by or before any
governmental or regulatory authority or arbitrator: (a) affecting Seller (as
plaintiff or defendant) which could,
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individually or in the aggregate, have a material adverse effect on the Acquired
Assets; or (b) against the Seller relating to the transactions contemplated by
this Agreement.
4.7 BROKERS. The Seller has not employed any financial advisor,
broker or finder, and has not incurred or will not incur any broker's, finder's,
investment banking or similar fees, commissions or expenses in connection with
the transactions contemplated by this Agreement.
4.8 COMPLIANCE. To the knowledge of the Seller, the Seller is in
compliance with all federal, state, local and foreign laws, ordinances,
regulations, judgments, rulings and orders applicable relating to the Acquired
Assets. To the knowledge of the Seller, the Seller is not subject to any
judicial, governmental or administrative order, judgment or decree.
4.9 FINANCIAL STATEMENTS. The Seller has previously delivered to the
Purchaser true and complete copies of the Financial Statements. To the knowledge
of the Seller, the Financial Statements: (a) have been prepared in accordance
with the books of account and records of the Seller; (b) fairly present in all
material respects the Seller's financial condition and results of operations at
the dates and for the periods specified in the those statements; and (c) have
been prepared in accordance with United States generally accepted accounting
principles consistently applied with prior periods.
4.10 CERTAIN EMPLOYEES. To the knowledge of the Seller, the Seller
treated Xxxxx Xxxxx, Xxxx Xxxxx, Xxx Xxxxxxx and Xxxxx Xxxxx as employees of the
Seller for tax purposes (including withholding).
4.11 LICENSES. To the knowledge of the Seller, the Seller holds all
governmental, franchises, authorizations, permits, certificates, variances,
exemptions, orders and approvals, domestic or foreign (collectively, the
"Licenses") which are required or utilized in the operation or usage of the
Acquired Assets. To the knowledge of the Seller, the Seller has not engaged in
any activity that would cause revocation or suspension of any such Licenses. To
the knowledge of the Seller, no action or proceeding looking to or contemplating
the revocation or suspension of any such Licenses is pending or threatened.
4.12 PROPRIETARY RIGHTS. Except as set forth on Schedule 4.12, (i) to
the knowledge of the Seller, the Intellectual Property is owned by, licensed to
and/or licensed by the Seller, (ii) to the knowledge of the Seller, the Seller
is not in conflict with or infringing upon the asserted rights of others in
connection with the Intellectual Property, (iii) HighText Publications, Inc. has
transferred to the Seller all of its rights, title and interest in and to any
and all proprietary, technology, legal and other rights in all multimedia
software and CD-Rom software and programs, and all books and other publications,
in each case relating to the "Crash Course" line of products together with any
and all copyrights, patents, trademarks, trade secrets and other proprietary
rights relating thereto, and (iv) the Seller has not assigned any rights
relating to the "Crash Course" products or Web Site, if any.
4.13 INVESTMENT REPRESENTATIONS.
(a) The Seller understands and acknowledges that the Payment Shares
have not been registered under the Securities Act. The Seller hereby represents
and warrants that:
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(i) the Payment Shares are being acquired only for investment for the Seller's
own account, and not as a nominee or agent and not with a view to the resale or
distribution thereof, and the Seller has no present intention of selling,
granting any participation in or otherwise distributing any interest therein
within the meaning of the Securities Act, (ii) the Seller does not have any
contracts, understandings, agreements or arrangements with any Person to sell,
transfer or grant participation to such Person or any third Person, with
respect to any of the Payment Shares, (iii) the Seller has had an opportunity
to seek outside advice with respect to the terms and conditions of this
Agreement and its investment in the Payment Shares, and (iv) the Seller has had
ample opportunity to ask questions of BPMC's representatives concerning its
investment.
(b) The Seller acknowledges that it can bear the economic risk of its
investment in the Payment Shares for an indefinite period of time and has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment therein. The Seller
understands that the Payment Shares are characterized as "restricted
securities" under federal securities laws since they are being acquired in a
transaction not involving a public offering and that under such laws and
applicable regulations the Payment Shares may not be resold without
registration or an exemption from registration under the Securities Act. The
Seller represents that it is generally familiar with and generally understands
the existing resale limitations imposed by the Securities Act and the rules and
regulations promulgated thereunder.
(c) The Seller understands and agrees that the certificates evidencing
the Payment Shares will bear an appropriate legend evidencing the restricted
nature of the Payment Shares and indicating that no transfer of any of the
Payment Shares may be made unless such Payment Shares are registered under the
Securities Act or an exemption from such registration is available, and that
BPMC will instruct its transfer agents not to transfer any such Payment Shares
unless such transfer shall be made in compliance with such legend. The
legend shall be substantially in the form set forth below.
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE OR HYPOTHECATION
OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THESE SHARES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS DULY
REGISTERED UNDER THE ACT OR UNLESS, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, SUCH TRANSACTION IS
EXEMPT FROM THE REGISTRATION PROVISIONS OF THE ACT."
4.14 INVENTORY. To the knowledge of the Seller, there are no security
interests under any security agreements affecting the Inventory.
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4.15 LIMITATION ON SELLER'S WARRANTIES. Except as expressly set forth in
Article IV, Seller makes no express or implied warranty of any kind whatsoever,
including, without limitation, any representation as to physical condition or
value of the Acquired Assets or the future profitability or future earnings
performance of any business. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED. Except as expressly set
forth in this Agreement, the Acquired Assets are being sold "AS IS, WHERE IS."
4.16 DEFINITION OF KNOWLEDGE. For purposes of this Agreement, the
knowledge of the Seller shall be deemed to be limited to the actual knowledge
as of the date hereof of L. Xxxxx Xxxxxx, without giving effect to imputed
knowledge and without any duty of investigation.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; EFFECT OF REPRESENTATIONS
AND WARRANTIES. The representations and warranties of the Purchaser and of the
Seller set forth in this Agreement shall survive the date hereof to the extent
provided in Section 5.3(d) hereof.
5.2 INVESTIGATION. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or
on behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made.
5.3 INDEMNIFICATION.
(a) By the Seller. Subject to Section 5.3(d) hereof, the Seller agrees
to indemnify and hold harmless the Purchaser and its directors, officers,
employees and agents from, against and in respect of, the full amount of any
and all liabilities, damages, claims, deficiencies, fines, assessments, losses,
taxes, penalties, interest, costs and expenses, including, without limitation,
reasonable fees and disbursements of counsel, arising from, in connection with,
or incident to (i) any breach or violation of any of the representations,
warranties, covenants or agreements of the Seller contained in this Agreement
or any agreements referred to herein and delivered to Purchaser; and (ii)) any
and all third party actions, suits, proceedings, demands, assessments or
judgments, costs and expenses incidental to any of the foregoing.
(b) By the Purchaser and BPMC. Subject to Section 5.3(d) hereof, BPMC
and the Purchaser each agree to indemnify and hold harmless the Seller from,
against and in respect of, any and all liabilities, damages, claims,
deficiencies, fines, assessments, losses, taxes, penalties, interest, costs and
expenses, including, without limitation, reasonable fees and disbursements of
counsel, arising from, in connection with, or incident to (i) any breach or
violation of any of the representations, warranties, covenants or agreements of
BPMC or the Purchaser contained in this Agreement or any agreement referred to
herein and delivered to Seller; and (ii) any and all third party actions,
suits, proceedings, demands, assessments or judgments, costs and expenses
incidental to any of the foregoing.
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(c) Indemnity Procedure. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement
is referred to herein as the "Indemnifying Party" and the other party or
parties claiming to indemnity is referred to as the "Indemnified Party".
An Indemnified Party under this Agreement shall, with respect to claims
asserted against such party by any third party, give written notice to the
Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement promptly after the receipt of any written claim
from any such third party, and not later than twenty (20) days prior to the
date any answer or responsive pleading is due, and with respect to other
matters for which the Indemnified Party may seek indemnification, give prompt
written notice to the Indemnifying Party of any liability which might give rise
to a claim for indemnity; provided, however, that any failure to give such
notice will waive any rights of the Indemnified Party only to the extent the
rights of the Indemnifying Party are materially prejudiced.
The Indemnifying Party shall have the right, at its election, to take over
the defense or settlement of such claim by giving written notice to the
Indemnified Party at least ten (10) days prior to the time when an answer or
other responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes such election, it may conduct the defense of such claim
through counsel of its choosing (subject to the Indemnified Party's approval of
such counsel, which approval shall not be unreasonably withheld), shall be
solely responsible for the expenses of such defense and shall be bound by the
results of its defense or settlement of the claim. The Indemnifying Party shall
not settle any such claim without prior notice to and consultation with the
Indemnified Party, and no such settlement involving any equitable relief and no
settlement which might otherwise have a material adverse effect on the
Indemnified Party may be agreed to without the written consent of the
Indemnified Party (which consent shall not be unreasonably withheld). So long as
the Indemnifying Party is diligently contesting any such claim in good faith,
the Indemnified Party may pay or settle such claim only at its own expense and
the Indemnifying Party will not be responsible for the fees of separate legal
counsel to the Indemnified Party. If the Indemnifying Party does not make such
election, or having made such election does not in the reasonable opinion of the
Indemnified Party proceed diligently to defend such claim, then the Indemnified
Party may (after written notice to the Indemnifying Party), at the expense of
the Indemnifying Party, elect to take over the defense of and proceed to handle
such claim in its discretion and the Indemnifying Party shall be bound by any
defense or settlement that the Indemnified Party may make in good faith with
respect to such claim. In connection therewith, the Indemnifying Party will
fully cooperate with the Indemnified Party should the Indemnified Party elect to
take over the defense of any such claim.
The parties agree to cooperate in defending such third party claims and
the Indemnified Party shall provide such cooperation and such access to its
books, records and properties as the Indemnifying Party shall reasonably
request with respect to any matter for which indemnification is sought
hereunder; and the parties agree to cooperate with each other in order to
ensure the proper and adequate defense thereof.
With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying Party
upon the earlier to
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occur of: (i) the entry of a judgment against the Indemnified Party and the
expiration of any applicable appeal period; (ii) the entry of an unappealable
judgment or final appellate decision against the Indemnified Party; or (iii) a
settlement of the claim. Notwithstanding the foregoing, provided that there is
no dispute as to the applicability of indemnification, the reasonable expenses
of counsel to the Indemnified Party shall be reimbursed on a current basis by
the Indemnifying Party if such expenses are a liability of the Indemnifying
Party. With regard to other claims for which indemnification is payable
hereunder, such indemnification shall be paid promptly by the Indemnifying
Party upon demand by the Indemnified Party.
(d) Indemnity Limitations. Notwithstanding anything to the contrary
herein, (i) no claim for indemnification for violation of any covenant,
agreement, representation or warranty may be asserted after eighteen months of
the date hereof; and (ii) the maximum liability of each Indemnifying Party for
any breach of a covenant, agreement, representation or warranty shall be the
lesser of (i) $199,500.00 or (ii) the value of the Payment Shares (determined in
the manner and as of the time set forth in the last sentence of Section 5.3(e);
provided, however that the limitations set forth above shall not apply to
breaches of covenants under Section 2.2. Indemnification pursuant to this
Section 5.3 shall be the exclusive remedy of the parties for any inaccuracy in
or breach of any representation, warranty, covenant or agreement contained in
this Agreement or in any closing document executed and delivered pursuant to the
provisions of this Agreement. Without limiting the generality of the foregoing
sentence, no legal action sounding in tort or strict liability may be maintained
by any party.
(e) Payment for Liabilities. The amount of the Liabilities for which
indemnification is determined to be due pursuant to this Section 5.3 from the
Seller to the Purchaser, shall be tendered by the Seller to the Purchaser:
(i) by returning the Payment shares; (ii) in cash; and (iii) through any other
mechanism acceptable to the Purchaser. For purposes of determining the value of
the Payment Shares returned to the Purchaser pursuant to this Section 5.3, the
Payment Shares shall be deemed to have a value equal to the average of the
closing NASDAQ (or other exchange or over the counter market, if applicable)
sale prices for Common Stock of Purchaser during the 30 day period immediately
preceding (but not including) the earlier of the date of (a) the determination
by a court of competent jurisdiction and/or arbitration tribunal that such
Liabilities are due or (b) the settlement of the claim.
ARTICLE VI
CLOSING; DELIVERIES
6.3 CLOSING. (a) Upon execution of this Agreement, the Seller shall
deliver the following to the Purchaser:
(i) documents transferring and assigning to Purchaser the
ownership of the items of Intellectual Property constituting part of the
Acquired Assets;
(ii) a certificate of the Secretary of State of the State of
California, as of a recent date, as to the good standing of Seller;
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(iii) a certificate, dated the closing date, of the Secretary of the
Seller, setting forth the authorizing resolutions adopted by the Seller's Board
of Directors and Shareholders with respect to the transactions contemplated
hereby and certifying its Certificate of Incorporation;
(iv) except for the estimated closing date used in the bulk sale
notice falling on a date prior to the date hereof, the Seller shall have
complied with any bulk sales law requirements and Seller shall deliver to
Purchaser a certificate, dated the closing date, from the President of the
Seller to such effect;
(v) the Schedules to this Agreement;
(vi) all of the Inventory shall have been placed with a third party
common carrier on route to Purchaser (it being agreed that (X) title to the
Acquired Assets passes to Purchaser as of the date of this Agreement, (Y)
Purchaser and Seller shall each pay one-half of the freight costs for
delivering the Inventory to Purchaser, and (Z) Purchaser bears all risk
associated with the shipment of the Inventory to Purchaser once the Inventory
is delivered to a third party common carrier); and
(vii) such other documents and instruments as the Purchaser may
reasonably request.
(b) Upon execution of this Agreement, the Purchaser shall deliver the
following documents and instruments, duly executed, to the Seller:
(i) the certificates representing the Payment Shares, issued in the
name of Seller;
(ii) certificates of the Secretaries of State of the States of New
York and Delaware, as of a recent date, as to the good standing of each of BPMC
and the Purchaser and certifying its Certificate of Incorporation;
(iii) certificates, dated the closing date, of the Secretary of
each of BPMC and the Purchaser, setting forth the authorizing resolutions
adopted by each of BPMC's and the Purchaser's Board of Directors with respect
to the transactions contemplated hereby;
(iv) a resale certificate of BPMC; and
(v) such other documents and instruments as the Seller may
reasonably request.
ARTICLE VII
COVENANTS
---------
7.1 RESTRICTION ON TRANSFER.
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(a) During the one year period following the date of this Agreement,
the Seller covenants and agrees not to sell, assign, pledge or otherwise
transfer, encumber or dispose of all or any part of the Payment Shares without
the prior written consent of the Purchaser, which consent may be withheld
arbitrarily. Notwithstanding the foregoing, upon prior written notice to BPMC,
(i) Seller may transfer the Payment Shares to its parent, Educorp Multimedia,
Inc. and (ii) Educorp Multimedia, Inc. may transfer the Payment Shares to its
parent, Hariston Corporation, in each case only if such transferee agrees to be
bound by the terms and conditions of this Agreement and the form of such
agreement by such transferee is reasonably acceptable to BPMC. BPMC will
instruct its transfer agents not to transfer any Payment Shares unless such
transfer shall be made in compliance with this Agreement. Any transfer or
purported transfer by Seller in violation of the provisions of this Section 7.1
shall be null and void.
(b) In addition to the legend set forth in Section 4.13 the
certificates representing the Payment Shares shall be endorsed as follows:
"Any transfer or other disposition of the shares
represented by this certificate is subject to the
restrictions on transfer set forth in an Asset
Purchase Agreement among Xxxxx Xxxxxx Multimedia
Company, Inc., Xxxxx Xxxxxx Holdings, Inc. and
HighText Interactive, Inc. dated ____________,
1998; provided, however, that all such
restrictions on transfer under the Asset Purchase
Agreement expire on the first anniversary of the
date of the Asset Purchase Agreement."
7.2 NON-COMPETITION. (a) The Seller agrees that, for a period of two
(2) years after the date hereof, the Seller shall not, in the United States or
any other geographic area where the Purchaser does business, alone or in
association with others; (i) engage, directly or indirectly, in the type of
business conducted by Seller within the two (2) years prior to the date hereof
(the "Competitive Activities"); and (ii) have any interest in or be employed by
(or act as a consultant to) any company which is engaged in Competitive
Activities.
(b) During the same period, the Seller shall not, and shall use its
respective best efforts not to allow any person under its actual control
(including employees and agents of the Seller or any affiliated company under
its actual control) to, directly or indirectly, on behalf of itself or any other
person: (i) call upon or accept business involving the Competitive Activities
from or solicit business involving the Competitive Activities of any person who
is, or who had been at any time during the preceding two (2) years, a customer
of Purchaser or Seller, or otherwise divert or attempt to divert any business
involving the Competitive Activity from Purchaser or Seller; (ii) recruit or
otherwise solicit or induce any person who is an employee of, or otherwise
engaged by, Purchaser to terminate his or her employment or other relationship
with Purchaser or hire any person who has left the employ of Purchaser during
the preceding two (2) years; or (iii) use or purport to authorize any person to
use any name, xxxx, logo, trade dress or other identifying words or images which
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are the same as or confusingly similar to those used at any time by Purchaser
or Seller in connection with the Acquired Assets.
(c) Except as otherwise provided herein, each party hereto will keep
confidential any information obtained from the other party in connection with
the transactions contemplated by this Agreement, except as and to the extent
required by applicable law.
(d) The restrictions set forth in this Section 7.3 are considered by the
parties to be fair and reasonable. The Seller further acknowledges that the
Purchaser would be irreparably harmed and that monetary damages would not
provide an adequate remedy in the event of a breach of the provisions of this
Section 7.2. Accordingly, the Seller agrees that, in addition to any other
remedies available to the Purchaser, the Purchaser shall be entitled to specific
performance, injunction and other equitable relief to secure the enforcement of
these provisions, and the party seeking such relief shall not be required to
post bond as a condition thereto. If any provisions of this Section 7.1 relating
to the time period, scope of activities or geographic area of restrictions is
declared by a court of competent jurisdiction to exceed the maximum permissible
time period, scope of activities or geographic area, the maximum time period,
scope of activities or geographic area, as the case may be, shall be reduced to
the maximum which such court deems enforceable. If any provisions of this
Section 7.2 other than those described in the preceding sentence are adjudicated
to be invalid or unenforceable, the invalid or unenforceable provisions shall be
deemed amended (with respect only to the jurisdiction in which such adjudication
is made) in such manner as to render them enforceable and to effectuate as
nearly as possible the original intentions and agreement of the parties.
7.2 CHANGE OF CORPORATE NAME. Seller may retain its corporate name so
long as it is not actively engaged in business. Prior to actively engaging in
any business, Seller shall take all necessary corporate action to effect the
change of its corporate name to a name dissimilar to its present name,
including the filing of the required amendment to its certificate of
incorporation in the offices of the Secretary of State of the State of
California.
7.3 SALES TAX. All sales, transfer and similar taxes in connection with
the sale of the Acquired Assets hereunder to the Purchaser shall be borne
equally by the Seller and the Purchaser.
7.4 BULK SALES LAWS. Seller shall comply with and fulfill all
requirements regarding any applicable bulk sales law. In addition to any other
rights to indemnification contained herein, the Seller, subject to the
limitations set forth in Section 5.3(d), shall indemnify and hold the purchaser
harmless against any and all claims, losses, liabilities and damages and any
and all costs and expenses, which Purchaser may incur as a result of or arising
out of any failure by the parties to comply with any bulk sales law.
ARTICLE VIII
MISCELLANEOUS
9.1 NOTICES. Any Notice, demand, claim or other communication under
this Agreement shall be in writing and shall be deemed to have been given upon
the delivery, mailing or transmission thereof, as the case may be, if delivered
personally or sent by
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certified mail, return receipt requested, postage prepaid, or sent by facsimile
or prepaid overnight courier to the parties at the addresses set forth below
their names on the signature pages of this Agreement (or at such other
addresses as shall be specified by the parties by like notice). A copy of any
notices delivered to the Purchaser shall also be sent to (i) Xxxx Xxxxxxx, P.C.
- 26th Floor, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxxxxx, Esq., Facsimile No.(000) 000-0000. A copy of any notices
delivered to the Seller shall also be sent to Altheimer & Xxxx, 00 Xxxxx Xxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, XX 00000, Attention: Xxxxxxx Xxxx, Esq., Facsimile
No.(000) 000-0000.
8.2 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules hereto) contains every obligation and understanding between the
parties relating to the subject matter hereof and merges all prior discussions,
negotiations and agreements (including, but not limited to, the Letter of
Intent dated August 27, 1997), if any, between them, and none of the parties
shall be bound by any conditions, definitions, understandings, warranties or
representations other than as expressly provided herein. All exhibits and
schedules referenced in this Agreement are expressly made a part of, and
incorporated by reference into, this Agreement.
8.3 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, heirs,
personal representatives, legal representatives, and permitted assigns.
8.4 RESERVED.
8.5 ASSIGNMENT. This Agreement may not be assigned by any party without
the written consent of the other party.
8.6 WAIVER AND AMENDMENT. Any representation, warranty, covenant, term or
condition of this Agreement which may legally be waived, may be waived, or the
time of performance thereof extended, at any time by the party entitled to the
benefit thereof, and any term, condition or covenant hereof (including, without
limitation, the period during which any condition is to be satisfied or any
obligation performed) may be amended by the parties at any time. Any such
waiver, extension or amendment shall be evidenced by an instrument in writing
executed on behalf of the appropriate party (in the case of the Purchaser by its
President, any Vice President or any other person who has been authorized by its
Board of Directors to execute waivers, extensions or amendments on its behalf).
No waiver by any party hereto, whether express or implied, of such party's
rights under any provision of this Agreement shall constitute a waiver of such
party's rights under such provisions at any other time or a waiver of such
party's rights under any other provision of this Agreement. No failure by any
party to take any action against any breach of this Agreement or default by
another party shall constitute a waiver of the former party's right to enforce
any provision of this Agreement or to take action against such breach or default
or any subsequent breach or default by such other party.
8.7 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement in intended, or shall be construed, to confer upon or give any
Person, other than the parties hereto and their respective heirs, personal
representatives, legal representatives,
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successors are permitted assigns, any rights or remedies under or by reason of
this Agreement.
8.8. SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement shall be declared invalid, void or
unenforceable, the remainder of the provisions of this Agreement shall remain
in full force and effect, and such invalid, void or unenforceable provision
shall be interpreted as closely as possible to the manner in which it was
written.
8.9 EXPENSES. Each party agrees to pay, without right of
reimbursement from the other party, the costs incurred by it incident to the
performance of its obligations under this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, costs incident
to the preparation of this Agreement, and the fees and disbursements of
counsel, accountants and consultants employed by such party in connection
herewith.
8.10 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.
8.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.12 INJUNCTIVE RELIEF. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance
or other equitable remedies in addition to all other remedies provided
hereunder or available to the parties hereto at law or in equity.
8.13 REMEDIES CUMULATIVE. No remedy made available by any of the
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now hereafter existing at law or in equity.
8.14 GOVERNING LAW. This Agreement has been entered into and shall
be construed and enforced in accordance with the laws of the State of New York
without reference to the choice of law principles thereof.
8.15 JURISDICTION AND VENUE. This Agreement shall be subject to the
exclusive jurisdiction of the courts of New York County, State of New York. The
parties to this Agreement agree that any breach of any term or condition of
this Agreement shall be deemed to be a breach occurring in the State of New
York by virtue of a failure to perform an act required to be performed in the
State of New York and irrevocably and expressly agree to submit to the
jurisdiction of the courts of the State of New York for the purpose of
resolving any disputes among the parties relating to this Agreement or the
transactions contemplated hereby. The parties irrevocably waive, to the fullest
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement, or any judgment entered by any
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court in respect hereof brought in New York County, State of New York, and
further irrevocably waive any claim that any suit, action or proceeding brought
in New York County, State of New York has been brought in an inconvenient forum.
8.16 PARTICIPATION OF PARTIES. The parties hereto acknowledge that this
Agreement and all matters contemplated herein have been negotiated by both
parties hereto and their respective legal counsel and that both parties have
participated in the drafting and preparation of this Agreement from the
commencement of negotiations at all times through the execution thereof.
8.17 FURTHER ASSURANCES. The parties hereto shall deliver any and all
other instruments or documents required to be delivered pursuant to, or
necessary or proper in order to give effect to, all of the terms and provisions
of this Agreement.
8.18 TERMS IN CONTEXT. Whenever from the context it appear appropriate,
each term stated in either the singular or the plural shall include the
singular and the plural and pronouns in either the masculine, the feminine or
the neuter gender shall include the masculine, feminine and neuter.
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IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
XXXXX XXXXXX MULTIMEDIA
HOLDINGS, INC.
By: /s/ XXXXX XXXXXX
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
and President
Facsimile No. (000) 000-0000
Address: 00 X. 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX
XXXXX XXXXXX MULTIMEDIA
COMPANY, INC.
By: /s/ XXXXX XXXXXX
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
and President
Facsimile No. (000) 000-0000
Address: 00 X. 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX
HIGHTEXT INTERACTIVE, INC.
By:
-------------------------------------
Name: L. Xxxxx Xxxxxx
Title:
Facsimile No. (000) 000-0000
Address: c/x Xxxxxxxx Corporation
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 226
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IN WITNESS WHEREOF, the parties hereto have each executed and
delivered this Agreement as of the day and year first above written.
XXXXX XXXXXX MULTIMEDIA
HOLDINGS, INC.
By:
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
and President
Facsimile No. (000) 000-0000
Address: 00 X. 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX
XXXXX XXXXXX MULTIMEDIA
COMPANY, INC.
By:
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
and President
Facsimile No. (000) 000-0000
Address: 00 X. 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX
HIGHTEXT INTERACTIVE, INC.
By: /s/ L. XXXXX XXXXXX
----------------------------------
Name: L. Xxxxx Xxxxxx
Title: Chief Financial Officer
and Secretary
Facsimile No. (000) 000-0000
Address: c/x Xxxxxxxx Corporation
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
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